India Pushes For Investment Treaty Talks With US Amid US Concerns About India’s ‘Discriminatory’ Policies Against American Businesses

Employees sort clothes before packing them at the Estee garment factory in Tirupur, India, on July 9.
Reuters

India has expressed willingness to launch negotiations with the U.S. on a bilateral investment treaty to bolster trade ties between the two countries, shortly after the U.S. and China agreed this week to restart talks on a similar two-way treaty.

India’s commerce and industry minister, Anand Sharma, who spoke to reporters in Washington Friday after discussions concluded with U.S. Trade Representative Michael Froman and other senior U.S. officials, said no dates were set for the first round of negotiations on a bilateral treaty for Indian and U.S. investment, according to Reuters. The treaty “was discussed today, and we have signaled our acceptance,” Sharma said, adding that a $500 billion annual two-way trade target, significantly higher than the current volume of $106 billion a year, was achievable “if we make a real effort.”

The announcement came a day after Froman urged India to reverse its trade policies, which he said were discriminatory against American companies and were creating tensions between the two countries.

The U.S. runs a far higher trade deficit with China than it does with India, but India has faced comparatively more criticism from the U.S. business community and lawmakers over the protectionist policies of the Indian government.

“Let me stress that as a friend of India and one of the caretakers of our economic relationship, I am concerned about the investment and innovation environment in India,” Froman said in an address before the U.S.-India Business Council Thursday, Reuters reported.

On Monday, ahead of the Indian delegation’s visit to the U.S., the country’s Prime Minister Manmohan Singh said he would review the preferential market access, or PMA, policy, that mandates companies, mainly in the telecommunications sector, source electronic goods from domestic manufacturers.

Froman said the U.S. welcomed Singh’s decision to suspend the policy, but added that Washington remains concerned about several other Indian policies, which were put in place to boost manufacturing.

“There has been great concern about localization measures that are meant to stimulate domestic manufacturing and achieve other important domestic-policy objectives, including preferences for solar developers who use domestically manufactured solar equipment,” Reuters quoted Froman as saying. “Similarly, in the area of intellectual-property rights, there has been substantial concern raised about recent actions to impose special rules for the patenting of medicines that otherwise meet the internationally accepted criteria.”

India’s finance minister, P. Chidambaram, also in an address before the U.S.-India Business Council, said the two countries should not let “a few cases of business rivalry” dampen their relations, while asking for some time, as the Indian government is under pressure to create jobs during the slowest economic growth the nation has seen in a decade.